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DECREE No

DECREE No. 02/1999/ND-CP OF JANUARY 27, 1999 AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE REGULATION ON INVESTMENT IN FORMS OF BUILD-OPERATE-TRANSFER CONTRACTS, BUILD-TRANSFER-OPERATE CONTRACTS AND BUILD-TRANSFER CONTRACTS APPLICABLE TO FOREIGN INVESTMENT IN VIETNAM

THE GOVERNMENT

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to the Law on Foreign Investment in Vietnam of November 12, 1996;

At the proposal of the Minister of Planning and Investment,

DECREES:

Article 1.- To amend and supplement the following articles of the Regulation on investment in forms of build-operate-transfer contracts, build-transfer-operate contracts and build-transfer contracts applicable to foreign investment in Vietnam, which was issued together with Decree No.62/1998/ND-CP of August 15, 1998 of the Government (hereafter referred to as the Regulation):

1. To add to Article 3 of the Regulation a new clause (Clause 3) as follows:

"3. The rights and obligations of BOT enterprises, the relationship between BOT enterprises and foreign investors in the execution of projects shall be agreed upon by the parties in the BOT, BTO or BT contracts. To confirm these matters, the parties may agree in the contracts to carry out one of the following modes, provided that they comply with all provisions of the BOT, BTO or BT contracts:

a) The BOT enterprise signs BOT, BTO or BT contract and forms together with a foreign investor a party to such contract;

b) The BOT enterprise takes over the foreign investor�s rights and obligations relating to the execution of the project; the taking over must be legalized by a document signed by the BOT enterprise, the foreign investor and the competent State agency; after it is approved by the Ministry of Planning and Investment, such document shall be considered an integral part of the BOT, BTO or BT contract;

c) Other modes approved by the Ministry of Planning and Investment".

2. To add the following paragraph to the end of Clause 1, Article 24 of the Regulation:

"The parties may agree in a BOT, BTO or BT contract on other principal contents, including the fact that the lending party shall be entitled to take over part or whole of the rights and obligations of the BOT enterprise in order to execute the project (hereafter referred to as the right to take over the project) in cases where the BOT enterprise or the foreign investor fails to fulfill its/his/her obligations according to such contract or the loan contract, provided that the lending party shall fulfill the corresponding obligations of the BOT enterprise or the foreign investor stipulated in the BOT, BTO or BT contract and the investment license. The conditions, procedures and contents for exercising the lending party�s right to take over the project must be stipulated in the loan contract, the loan guarantee document or other agreement signed between the BOT enterprise and/or the foreign investor and the lending party, and must be approved by the competent State agency".

3. To amend Clauses 2 and 3, Article 24 of the Regulation as follows:

"2. To execute a BOT, BTO or BT project, the BOT enterprise shall be entitled to sign contracts for land lease, construction, installation of machinery and equipment, consultancy and expertise services, purchase of raw materials and sale of main products and services, provision of technical services, capital borrowing, pledge or mortgage of property and other contracts as prescribed by Vietnamese law.

3. The parties signing the BOT, BTO or BT contracts and the parties signing the above-said contracts, which are guaranteed by the Vietnamese competent State agency in term of the obligation to perform such contracts as stipulated in Clause 2, Article 10 of this Regulation, shall be entitled to agree in the contracts on the application of foreign laws, provided that the agreements on foreign law selection are not contrary to the provisions of Vietnamese law and are approved by the Ministry of Justice".

4. To amend and supplement Clauses 1 and 3, Article 25 of the Regulation as follows:

"1. The disputes arising between the competent State agency(ies) and foreign investors or BOT enterprises in the course of executing BOT, BTO and/or BT contracts and guarantee contracts prescribed in Clause 2, Article 10 of this Regulation shall be settled first of all through negotiations and/or conciliation. If the disputes cannot be settled through negotiations and/or conciliation, the disputing parties may have their disputes settled by an arbitration council to be set up upon their mutual agreement".

"3. The disputes arising between BOT enterprises and foreign organizations or individuals in the course of executing projects, and the disputes arising between BOT enterprises and Vietnamese economic organizations taking part in the execution of projects which are guaranteed by the Vietnamese competent State agency(ies) in term of the obligation to perform the contracts as prescribed in Clause 2, Article 10 of this Regulation shall be settled first of all through negotiations and/or conciliation. If the disputes cannot be settled through negotiations and/or conciliation, the disputing parties may have their disputes settled by a Vietnamese arbitration organization or an arbitration council to be set up upon their mutual agreement or an arbitration established and operating in a third country.

Other disputes arising between BOT enterprises and Vietnamese economic organizations in the course of executing the projects shall be settled according to Clause 2, Article 102 of Decree No.12-CP of February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam".

Article 2.- This Decree takes effect 15 days after its signing.

Article 3.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People�s Committees of the provinces and centrally-run cities shall have to implement this Decree.

On behalf of the Government

Prime Minister
PHAN VAN KHAI